Manpower Retains Neutral Rec - Analyst Blog
29 Mars 2012 - 5:30PM
Zacks
The job market is still sluggish and the economy still not
completely awake from its hibernation. But in tough times one has
to face headwinds, balance itself and persevere. This is exactly
what Manpower Group (MAN) is doing.
Manpower’s comprehensive range of services makes it a truly
global staffing firm. The company provides services for the entire
employment and business cycle including permanent, temporary and
contract recruitment, employee assessment and selection, training,
outplacement, outsourcing and consulting.
The company’s brand value and strong global network provides it
a competitive advantage and reinforces its dominance in the market.
Manpower leverages a strong network of about 3,800 offices,
spanning 80 countries and serving approximately 400,000 clients. It
benefits from growth prospects in under-penetrated staffing
markets.
Efforts helped Manpower to post better-than-expected
fourth-quarter 2011 results on the back of revenue growth with
emerging markets portraying robust trends, particularly Asia.
Better expense control also provided cushion to the bottom-line.
However, a fall in demand for the counter-cyclical outplacement
services continues to impact the results.
The quarterly earnings of 98 cents a share beat the Zacks
Consensus Estimate of 87 cents and soared 48.5% from 66 cents
earned in the prior-year quarter. Net earnings for the quarter also
exceeded management’s forecast of 85 cents to 95 cents a share.
Milwaukee, Wisconsin-based Manpower said that total revenue for
the quarter rose 5.3% to $5,484 million from the prior-year quarter
and 5.8% in constant currency. However, the quarterly revenue fell
short of the Zacks Consensus Estimate of $5,560 million. Revenue
growth dovetails with management’s projection of 5% to 7% increase,
in constant currency.
However, Right Management continues to struggle due to an 8% (in
constant currency) fall in the counter-cyclical outplacement
business. Revenue from Right Management services dropped 8.2% to
$79.8 million and 8.6% in constant currency. Right Management
posted an operating loss of $5.6 million compared with a loss of
$16.8 million in the year-ago period.
Manpower projects a cautious outlook for first-quarter 2012. The
company warned that the softness in the current economic
environment is likely to persist in 2012. Management alarmed that
the ongoing turmoil in Europe could be a potential threat to
creating new jobs.
Manpower, which competes with Kelly Services
Inc. (KELYA), now expects first-quarter 2012 earnings in
the range of 30 cents to 38 cents a share, including an unfavorable
impact of foreign currency translation of 2 cents.
Management now projects total revenue to be flat or marginally
up in constant currency for the quarter. Management now anticipates
Right Management business to be down between 7% and 9% in constant
currency in the first quarter.
To counter this, the company is contemplating on exiting lower
margin business and venturing into high margin business in the
coming quarters. Manpower also witnessed a surge in permanent
recruitment business. The demand for the counter-cyclical
outplacement services portrayed some signs of steadiness, but it
continued to contract.
The above analysis supports our long-term Neutral stance on
ManpowerGroup, the global leader in the employment services
industry. Moreover, the company also holds a Zacks #3 Rank that
translates into a short-term Hold rating and correlates with our
long-term outlook.
KELLY SVCS A (KELYA): Free Stock Analysis Report
MANPOWER INC WI (MAN): Free Stock Analysis Report
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